Magazine Article | October 18, 2012

Retail IT VARs: Your Next Biggest Opportunity Is Closer Than You Think!

When you consider the latest digital signage trends, you’ll be hard pressed to justify why you shouldn’t be selling it.

One of the most urgent themes we’ve been promoting this year is the big changes that are happening in the retail IT space. With blog posts and magazine articles touting things such as “The Death Of POS VARs” and “If You Don’t Change Your Business Now, You’ll Hate Yourself Later,” it’s understandable why traditional POS (point of sale) resellers feel anxious when they sit down with their favorite IT channel publication. Sometimes I think part of this anxiety comes from resellers feeling (i.e. being made to feel) that to be successful in the future, they need to become experts in areas of IT that are entirely foreign to them right now. An example of this would be a POS reseller getting into the VoIP (voice over Internet Protocol)/unified communications space. Or, perhaps a VAR that’s been focused almost exclusively on the retail vertical feels pressure to become an IT expert in healthcare. Maybe, over the course of several years, your business could expand/morph into these new areas. But, right now, let’s focus on a baby step you can take that has the potential to get you back to double-digit profit margins much sooner. If you’re a retail IT solutions provider that’s only been focused on POS hardware, software, and peripherals to date, digital signage is the next offering you need to be selling, and here’s why.

Digital Signage Obstacles Are Being Removed
One of the things that has muddied the waters for the adoption of digital signage is the varying forecasts, even among otherwise reliable sources. For example, IMS Research said that global revenues for digital signage equipment and software were $5 billion in 2010 and will grow to more than $7 billion by 2013. ABI Research, on the other hand, believed the global digital signage market — including displays, media players, software, and installation/maintenance costs — amounted to only $1.3 billion in 2010. ABI projected the digital signage market to grow to $4.5 billion by 2016. Nick D’Alessio, retail solutions brand manager, Global SMB Solutions, Dell, offers some perspective on this. “As a displays engineer years ago, I worked on the impending surge of the digital signage revolution, and plasma was the flat panel technology of choice,” he says. “Analysts were projecting digital signage would soon approach the hockey stick growth curve, but obstacles such as capital cost of deployment kept moving the curve to the right.”

Several of the technology and economic barriers have been removed, which is finally allowing digital signage to become a viable solution for retailers (as well as healthcare providers, educational institutions, and corporations). “In addition to the high cost of displays, digital signage software used to be expensive, complicated, and it required a large commitment for training and support,” says Gene Ornstead, director of product marketing at ViewSonic. Don Pierson, CEO of Flash content management platform vendor Flypaper, cites one more obstacle that’s plagued digital signage in the past. “The biggest barrier has been the immaturity of the industry,” he says. “When organizations think about implementing digital signage, where do they go — traditional signage companies? A/V specialists? And, who should lead the initiative — IT? Marketing? I think as the industry is entering adolescence, it’s becoming more organized, and trustworthy brands are emerging.”

Digital Signage Offers Retailers What They Demand
All the industry analysts, VARs, and vendors I spoke with agreed that retail is the number one vertical — along with its cousins hospitality and QSRs (quick service restaurants) — that’s poised for digital signage adoption. “The primary goals within this vertical are: 1. enhancing the customer experience, 2. increasing sales, and 3. improving employee productivity,” says Neeraj Pendse, global product line manager, interactive digital signage, Elo Touch Solutions. Retailers are used to working in an environment with low profit margins. Solutions that can boost a retailer’s profit margins by even 1% can lead to hundreds of thousands of dollars in additional revenue. “We’ve seen digital signage solutions boost conversion rates [i.e. where browsers are converted into shoppers] up to 5% in a single year with the average sale also increasing by nearly as much,” says Pendse.

What You Need To Know To Be Successful
While digital signage sales opportunities are certainly increasing, there are a couple of challenges you need to be prepared to handle. “Finding the decision maker is the single biggest issue we face from a sales perspective,” says Pierson. “The decision maker for digital signage could be almost anywhere in the organization.” ViewSonic’s Ornstead echoes this finding and adds, “Stakeholders may include IT, marketing, merchandising, finance, or even customer experience managers.”

Another important component to successfully selling digital signage is to remember the old adage “content is king.” Pierson adds, “Whether you’re deploying interactive solutions, noninteractive solutions, or both, you need to show your customers something fresh and compelling.” Very few VARs will probably have the in-house talent to deliver on this point, which is why D’Alessio advises VARs to seek reliable partners. “Having a good creative agency is an important consideration for your content needs as you work to marry traditional static images of products with motion video, which requires a careful balance of substance and creativity.”

A final word of advice is to do your due diligence when selecting your digital signage software, which is the glue that holds your digital signage together and controls how content is presented to your customer. “Luckily, there are lots of options to choose from,” says D’Alessio. “Costs can range from a modest investment in software that schedules, manages, and plays the content in a single store on a few screens, to a significant investment in a system or service that manages hundreds of screens across multiple stores.”

All the experts I spoke with agree that VARs — especially retail VARs that already have established relationships in this market — are well-positioned to capitalize on digital signage sales opportunities. “Retail IT VARs understand all aspects of project development, deployment, and postsales support,” says Ornstead. “They just need to make the investment in resource, training, and commitment.”